ChrisOliver

Analysts said the data, including figures released the same day showing accelerating property prices, would renew policy makers' concerns about emerging bubbles.

"Odds are rising fast that a rate hike will be announced by June, and that yuan appreciation will resume in May," said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.

China's consumer prices were 2.8% higher in April than a year earlier, the National Bureau of Statistics said Tuesday, while producer prices were up 6.8%.

Separate surveys of economists by Dow Jones Newswires and Reuters had both expected a consumer price index gain of 2.7% and a producer price index rise of 6.5%.

The data showed price pressures heating up from March, when CPI rose 2.4% year-on-year, while the PPI had gained 5.9%.

"The rate hike is imminent, we just need one more data point supporting," said Dong Tao, Credit Suisse's chief regional economist in Hong Kong, adding that the central bank will be watching to see if annual consumer price inflation exceeds fixed-term savings deposit rates.

The People's Bank of China could tolerate a temporary bout of negative real interest rates, even as signs appear that savers have begun to liquidate their holdings as monthly inflation outpaces one-fixed deposit rates, currently at 2.25%.

Real-estate prices in China's 70 biggest cities rose 12.8% in April from a year earlier, accelerating from an 11.7% rise in March, figures released separately Tuesday by the National Bureau of Statistics showed.

Despite the price gains, Tao said that indications are policy measures designed to cool the housing market have been effective in tamping down sales volumes. Still, Tao said, the PBOC will likely hike interest rates if the monthly CPI reading rises above the government's 3% upper target.

Such an event appears a near certainty, as consumer prices are poised to trend higher in the next three months, affected by the low comparison base from a year earlier, according to reports Tuesday citing Yao Jingyuan, chief economist of China's National Bureau of Statistics.

That was well above expectations. A Reuters survey of analysts tipped bank lending of 570 billion yuan for the month, while one by Dow Jones Newswires predicted 600 billion yuan.

The April lending data means Chinese banks have extended 45% of their lending quota for 2010 in just four months, adding to the risks that credit could overshoot the government's 7.5 trillion yuan target.

"Without an increase in lending rates, meeting this target will be difficult," said RBC Capital Market's analysts in note to clients Tuesday.

Among other data, industrial output rose 17.8% year-on-year, below a Dow Jones forecast of 18.6% and a Reuters estimate of 18.5%. Retail sales increased by 18.5% from a year earlier, while Reuters had expected 18.0%.

Money supply as measured by M2 rose 21.5% at the end of April, compared to a 22% rise at the end of March. Urban fixed-asset investment gained 26.1% during the January-April period, above a 26.0% Dow Jones Newswires forecast.

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